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Things You Need to Know If You Want To Sell Your House After Retirement Pt. 2

November 17, 2022
Things You Need to Know If You Want To Sell Your House After Retirement Pt. 2

Retirement brings with it the possibility of starting your life anew. You can think of it as a reset. This time, you are wiser-able to understand things that may have appeared daunting and scary during your foolish youth.

And one of the points that retirees look to for comfort and rest is the property they have invested in. But then, this is not always the case. Sometimes, selling your house after retiring might be a better idea.

Here is the second installment of our piece on selling your property upon retirement. In this segment, we will look at why doing so may benefit you. 

Reasons to Sell Your Property

Desire to downsize

Desire to Downsize

Investing in a smaller home might seem like a good idea now that you’re older. The kids may have already moved on to build their own lives, leaving you and your better half living in a bigger space that may not make sense to you. 

Buying a smaller house would be practical as this would entail less maintenance and energy costs. 

While retirees and other home investors might see renting as impractical, it does bring some advantages. Among the notable ones is the absence of maintenance expenses and insurance deductibles. Homeownership requires these of property owners apart from issues of rising inflation and taxes. Renters are free from liability costs like equipment failures or calamity-caused property damages.

The only risk retirees are open to if they opt to rent is that they cannot control their landlords if they want to raise the rent.

Apart from selling your property in preference of renting out, you will avoid paying steep property taxes. 

Funds from equity

Funds From Equity

You can release your fund from home equity may if you choose to move to a smaller property. 

However, the proposed changes to Australia’s Home Equity Access Scheme (formerly Pension Loan Scheme) now offer more attractive benefits for retirees who choose to keep their properties. 

On January 1st, 2022, Australians who own a property within the country and are eligible for a qualifying pension may use their home as security for a loan.

The Home Equity Access Scheme allows borrowers to keep living in their family homes without selling their property. On top of that, they do not have to repay the loan within its term.

Boost Your Super, Look Into Downsizer Contribution

Boost Your Super, Look Into Downsizer Contribution

The Downsizer Super Contribution allows eligible Australians of 65 and older to direct some funds from selling their family home into their Super. The maximum amount an individual can contribute is $300,000 per person. As this is the case, a couple is allowed to contribute up to $600,000. 

Apart from not being compelled to settle for a smaller property, the advantages of making a Downsizer Super Contribution are two-fold:

Top Up Your Super Balance

If you are retiring without a substantial amount of savings on your super, it’s not too late. You can use the Downsizer Contribution to increase your Super’s balance.

Pay Fewer Taxes

Use the Concessional Tax Treatment of the Super System to get fewer taxes.

You become eligible for this if your contribution remains unmoved from the accumulation phase of the Super. The earnings accrued on this amount will get a 15% tax. You may also use your contribution to start a Super income stream. As a result, you will get 0% taxes.

Investing the sale proceeds in your name requires you to pay tax on earnings based on your marginal rate, along with the Medicare levy.

Making lump sum withdrawals is yet another good option as it is tax-free.

Finally Getting The Home of Your Dreams

Finally Getting the Home of Your Dreams 

If you use your retirement funds well, you can choose to move into the house of your dreams. 

They may also opt to use the proceeds from their sale to build their ideal home. If you plan to do so under Age Pension, you may need to undergo an Assets Test. As the name suggests, the test will determine the value of your assets, with the exception of your Principal Property. 

The money acquired from the sale is exempted for up to 12 months should this be the case. 

Should You Sell Your House Upon Retirement?

With all the reasons the article has laid out, choosing to sell your house when you retire might prove a gratuitous move for your finances. However, we need to reiterate that your financial situation must decide that. Selling your property without making a comprehensive assessment will only lead to possible dismay or regrets in the long run. 

Letting go of something you have held dear throughout the years is not an easy thing to do. Doing so requires you to train yourself to let go without attachment, knowing that something better is in the cards for you. 

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